Intro to International Development Exam Review.docx

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School

York University

Department

Social Science

Course

SOSC 1430

Professor

Miguel Gonzalez

Semester

Winter

Description

Intro to International Development Exam Review
Globalization from Above
Globalization from Above
 Susan George calls it the latest stage of world capitalism our current political
frame work
 Neoliberalism
 Corporate led
o Transnational corporations play an important in political economy
 Finance driven
 IMF and WB
o Promote this form of globalization
o Impeded in the SAPS
 It has increased inequality between and within nations
 Increased environmental degradation
 Over exploitation fro limited resources
 Political repression
 Slower growth rates in most countries
o And has also shown an decrease in previous developments
Liberalism
 Looking for a state to guarantee that bourgeoisie/merchant investments would not
be taken away randomly
 Economically, liberal favor capitalism and free trade rather then rigid state control
over commerce
 A SELF-INTERESTED ideology from point of view of rising bourgeoisie
 Wanted freedom for them to become capitalist
o Not calling for freedom for the masses
 Set some important ideas in motion, that other used to claims rights
and freedoms known today
Liberalism: Stresses
 It stresses individual freedoms
 Stresses market freedoms
o The possibly to engaged in capitalism transaction
 Minimal role of the state
o Less freedoms for people if state heavily involved
o Wants the state to stay out of social and economic regulation
Liberalism, Role of the State
 Protect individual rights and freedoms
 Protect private property
 Ensure freedoms of individuals to own property
 Freedom from government interference
 Freedom to engage in market transactions
Liberalism: Crisis
 Mechanism for the crisis o Great Depression (1929)
 Both in developed and underdeveloped countries
o Labor conflicts
 Growth of industry created industrial working class, which
organized collectively; people not happy with what they were
receiving in return
o Russian Revolution (1917)
o Mexican revolution (1910)
 Failure of liberalisms to work there
o World Wars (1914-1918; 1939-1945)
Neoliberalism
 A mainstream international economic theory positing that markets are almost
always the best decision-makers in terms of efficient resource allocation and that
trade and investment flows across borders are optimized when there are as few
restriction as possible. The term neo distinguishes the creed from classical
liberalism and indicates that some mainstream economists do recognize that there
are certain market failures that must be addresses
 Based upon open competitive markets and the price mechanism, meaning that
prices must be determined by supply and demand, not by government intervention
in the economy, they are pro-free trade and anti-trade unions
 Government rules and regulations are unwelcome
o Government spending is also cut and social welfare problems are
neglected which directly affect the poor
 Neoliberalism became part of the IMF and WB SAPs
 Neoliberalism engineered a massive transfer of capital from the third world to the
first
 Favor foreign capital over domestic capital
Capitalism
 The economic organization of society based on private ownership and control of
the means of production whereby people are free to sell their labor in the
marketplace. Owners of the means of production are able to make profit, and
accumulate more capital, by paying wage workers less than what the owners earn
though the sale of the products
 Corporations are they key mechanism to support capitalism
 Capitalism also goes along with neoliberalism
Structural Adjustment Programs (SAPs)
 A controversial series of economic and social reforms promoted by the IMF and
World Bank following the 1982 Debt Crisis that aimed to promote economic
development through minimizing the role of the state in societies and liberalizing
markets
o The IMF and World Bank use their financial influence to promote
structural adjustment polices. These policies involve a series of economic
and social reforms designed to promote the role of market forces within
the developing world. While the IMF and World Bank suggest that SAP
promote strong and stable economic growth, critics claims that their effects nave been counterproductive and have led to increased poverty and
growing inequality
 Structural Adjustment and Conditionality
o Severe austerity measures to restore macroeconomic balance
o Shock therapy: liberalization of prices, currency devaluation, and fiscal
discipline, rapid liberalization of trade, deregulation of markets,
privatization of state-owned enterprises, and privatization of health care
o Promotion of export industries
o Debt repayment assurances
 From project lending to program lending
o Adjustment programs
 To ensure that countries undertook these measures, numerous conditions were
attached to World Bank and IMF loans, and the release of further portions of
structural adjustment loans was made dependent on the successful implementation
of prior requirements
 IMF and World Bank austerity programs (SAPs) failed to produce sustained
economic growth and reduce poverty.
 As SAPs were also created to collect foreign debts, the IMF and World Bank
were viewed as debt collectors for private banks
Bretton-Woods Conference
 The World Bank and International Monetary Fund, so called because they were
founded in Bretton Woods, New Hampshire in 1944
 The Bretton-Woods system fixed exchange rates between countries to promote
financial stability and international trade, in which all national currencies were
pegged to the US dollar
 With WW2 coming to a close, the US and Britain began to plan a new
international order for the post-war era
 At the forefront of the conference was the creation of an international economic
system to promote trade and provide rules for economic relations between
countries
 44 countries met at Bretton Woods
IMF
 Created in 1945
 Last resort lender
 It was set up to oversee the workings of the system and to manage any potential
disruptions
 Each country member paid into the IMF a quota of its own currency
 When facing severe economic problems, such as balance of payments crisis in
which a country was importing more then export earning could pay for, countries
would be permitted to draw temporarily on the reserves of the IMF to pay
international debts
o Uses of these funds was to provide a country with sufficient time to
stabilize its economy without resorting to measures such as currency
devaluation  The IMF now focuses on a familiar range of macroeconomic policies and
objectives
World Bank
 Major lender- often for major infrastructural projects or large-scale projects that s
state needs public funds for- homogenous plan for all countries
o Lends money but also a planner
 Its role after the war was to make loans at preferential rates of interest to
devastated European countries by war
 From 1950 on, the Bank focused on providing loans to developing counties at
lower rates of interest than those of private international banks. These loans were
directed mainly towards building infrastructure for development
 Power of the IMF and WB- ― the equation is simple: no conditionality‘s, no cash.
For any debtor country, the fund is this able to turn the taps of the world finance
off and on at will, turning it into the most powerful international organization of
the 20 C, decisively influencing the well-being of the majority of the world
population‖
 The Bank is now responsible for overseeing the social and structural policies of
participating countries
World Trade Organization (WTO)
 Created in 1995 to administer a number of international trade agreements
involving goods, food, patents, intellectual property rights and services and
enforced an extensive body of rules intended to limit the power of governments
and increase opportunities for transnational business trade
 Under the rules of one agreement—the General Agreement on Tariffs and Trade
(GATT), water is considered as a good, and as such, is subject to the rule that
prohibits the use of export controls for any purpose and eliminates quantitative
restrictions on imports and exports
o In practical terms, this means that once a country has launched
commercial water exports it cannot change its mind based on
environmental concerns and restrict the flow of water out of its territory
 Free trade is advocated by the WTO
 Based in Geneva
 One of the 4 Bretton Woods Institutions
 158 members and 26 observer governments
 Establish framework for trade- regulates trade among countries
 60 different agreements, status of international legal texts.
 Seeks to eliminate barriers to free movements of goods
 The General Agreement on Trade Services has the intention to liberalize all
service actors in the WTO member countries to allow for private competition in
sectors once controlled exclusively by governments
Environmental and Human Rights
 The idea that the WTO and multilateral trade agreements trump environmental
and human rights  No trade protection against harmful chemicals
o Governments can‘t ban certain goods if it gets in the way of the flow of
goods
 Maude Barlow- Pg.92
o The WTO promotes and protects the trade I environmental services,
encouraging cross-border trade and investment in private water cleanup
companies. As in all tradable goods and services, governments are
encouraged to relinquish public control of water treatment to the private
sector and have to ensure that any rules they have in pace are the least
trade restrictive. This means that their rules and regulations meant to
protect the public and the environment must not hamper private business
and the pressure is on the government to lower their standards
Water: Commodity or Public Good
 Water is a commodity
 Access to water is available to those who can afford it
 Fresh water supplies are being privatized
o Private, for-profit water companies now provide municipal water services
in many parts of the world; put massive amount of freshwater in bottles
for sale‘ control vast quantities of water used in industrial farming,
mining energy production
 The shift from public to a private model of water segices can be traced to the rise
of neoliberalism, market based ideology
 For pro-fit companies wheel a lot of power in decision related to water
o Example: bottle water, delivery services
o Rise in the cost of access to water
 The WB encourages water privatization
o Some of the Banks agencies only will lend money to developing countries
if they adopt a private water delivery model
 IN 1992 in Dublin with attendance of over 100 countries and NGOs it was
declared that water had an economic value!
 Creates water inequality
 Public good
o Water is delivered by state owned public service
o Should be a basic right
Global Division of Labor
 A concept explaining the location of the activities of multinational corporations
and their benefits and arguing that high-value manufacturing remains in the core
countries and commodity and resource extraction is conducted in developing
countries, thus maintaining and deepening the underdevelopment of the periphery
o Characterized between the unequal exchange between the core and the
periphery
o New International Division of Labor
 Argued that manufacturing MNC‘s sought out Third World
locations for their low-cost labor while maintaining high-valued
added manufacturing in the developed countries with similar
exploitative effects Washington Consensus
 A tacit agreement between the International Monetary Fund, the World Bank, and
the US executive branch over the development policies that developing countries
should follow, this neoliberal orthodoxy form around the key issues of
macroeconomic prudence, export-orientated growth, and economic liberalization
 The consensus recommended the liberalization of capital flows and trade (through
free trade arrangements), the privatization of the public sector, and the abolition
of market-restricting regulations. It became a central component of structural
adjustment programs imposed by the Bank and the IMF on countries that requited
loans.
 These sets of policies are imposed when a country is heavily in debt
 By obtaining loans through the IMF and WB, they can get the loans or if they
don‘t they will not get the loans they need
 When the various elements of the WC doctrine are applied to indebted countries,
they are called structural adjustment programs.
o They programs lead to shock therapy
 These regulations and rules that are imbedded in SAPs and the Washington
Consensus are:
1. Encourage competition in all endeavors, at all levels
 People, firms, regions, and national are all in competition with
each other
2. Keep inflation law, that is, prevent wage=price-wage increase in an
upward spiral which reduces a currency‘s purchasing power. At the
merest sign of inflation, jack up the country‘s interest rates
3. Concentrate on exports and increase trade volume
a. Trade is supposed to be free
4. Allow capital to flow across borders, including short-term, speculative
capital, even though it has been shown again and again that such
movements are guaranteed eventually to produce financial and therefore
social crisis
5. Reduce taxes on corporations and rich individuals
6. Do not, however, close down tax havens which many companies and rich
individuals use to keep their money out of the taxman‘s clutches
7. Privatize
8. Make labor markets flexible, and increase competition between workers
 These policies actually led to worsening conditions in the countries that followed
them
Approaches to Multinational Corporations
 Dependency and Critical Approaches
o Multinational corporations are viewed as representatives of the global
capitalist system and therefore negative for developing countries in which
they invest
o The pioneers of dependency theory attributed an important role to multinational corporations in the maintenance of underdevelopment in the
periphery
o Connected to the new international division of labor or global divisions of
labor
 The Mercantile Approach and the National Interest
o Another common approach to the multinational corporations is to see it as
a representative of the political and economic interests of its home
country
o This approach has been particularly important in the stud
y of US based multinationals by both advocates of US hegemony and its
detractors
Globalization from Below
Globalization from Below
 Efforts from ordinary citizens to challenge ideas about development proposed by
transnational institutions Vs. policies of government that are not in the interests of
the poor
 Challenging power relations, promote new principles and ethical ideas of
development
 Social movements and civil society
 Challenge to neoliberalism and globalization
 Challenging inequalities
 Presenting alternatives for development
 Global water justice movement
1. Shift from national to global problems
2. Transnational links- use new communications technology for its own purposes
3. Seek to protect physical essentials of life
4. Seeking to defend common good and shared humanity
5. Mobilize to defend and expand democracy
Social Movements
 Definition for Social Movements:
o Organized collective efforts seeking to change (or to resist change in)
some major aspect of society
 Collective action
 Efforts from ordinary citizens to challenge ideas about development proposed by
transnational institutions
 Social movements can be both progressive and regressive: not necessarily the
good guys
 Enter into conflictual relations with clearly identified opponents
o E.g. people vs. mining company, or a developer….
 Make collective claims, have a target and make demands
 Share identity and goals o E.g. Via Campesina, indigenous organization, social justice movements,
women‘s movements
 Identity is shared or a common history
 Goals- they have a particular vision and want to achieve these
goals
 Organized in informal networks
 Social movements form due to negative policies
o Policies favor economic interest in stead of the populations
 Most social movements emerge out of pre-existing social networks
 E.g. neighborhood associations
 Non-state actors acting at the global level and engaging with global institutions
and processes
 Global Civil Society is about understanding globalization 'from below,' from the
perspective of ordinary people
 Global civil society also challenged neo-liberal globalization
o Movement from below
Triadic Model
 Trying to overcome state-market dichotomy
 States, markets, and civil society (third sector)
 Equal partners in development (conflict between WB and Social Movements on
what this means, however)
 IMF and WB reluctantly…
 Social Movements demand for state to play a reprogressive role
On-going Debates
 Role of the state
o Switched from whether it should intervene to how it should intervene
o How to make the state more democratic, responsive to societal demands
and efficient
 Role of the Market
o Switched from whether it should be regulated to how best to design
effective regulation
o How to make the private sector more transparent and specially responsible
(CSR- corporate social responsibility)
 Role of Civil Society
o From whether it should participate, to how to incorporate it into
development processes
o Arguments for CS Participation
 Reservoir of untapped resources
 Often missed by exclusive emphasis on states and markets
 Knowledge, values, bonds of trust, and capacities
o Alternative form of capital- social capital
 While poor might lack financial capital, human capital; have
capacity to work together collectively to address their problems
 e.g. partnerships with local communities o Can provide a watch dog role
 Can keep states and markets in check!
 Raise ethnical issues, pose them to politicians and corporations
o Relieve states from financial burdens
 Offer lower cost services (delivery agencies)
Subsistence Rights
 Of all the universal rights to life that people can claim on this planet, some are
essential to human survival. No matter who we are or where we live, we cannot
live without food and water.
 Subsistence rights are the rights to the fundamental, physical conditions that make
life possible. Peoples fundamental rights to:
o Food security
 People are becoming dependent on agribusiness corporations and
trading for their food supply
 Food is not being produced by local farmers, but by giant
corporations for global markets
 Control the global food market
o Fresh water
 More then a billion people lack access to clean water
 800 billion dollar industry
 Popular resistance is starting
o Food safety
 The science of biotechnology is changing how crops and animals
are genetically engineered
Economic Rights
 Since the Industrial Revolution, workers have fought for fair wages and working
conditions, not only to ensure their incomes are enough to meet basic needs, but
also to gain a sense of self-worth and human dignity
 UN Declaration of Human Right declares all people have the right to world, to
free of choice of employment and to protection against unemployment
o Contingent Work
 Precarious, part-time jobs, insecure forms of employment have
been on the rise
 Jobs in the service sector of soared, and most people employed are
women, children and people of color
o Sweatshop Labor
 Corporations are shifting their production offshore, for cheap labor
conditions
 Dangerous conditions
 Mainly located in free trade or export processing zones where
corporation are allowed to operate outside the labor and
environmental laws of the host country
o Debt Bondage
 Money must go to paying debts instead of paying for social
services
Environmental Right  1992 Rio Summit laid the foundation for international environmental action
o Climate Change
 Global warming
 Caused by the emission of the main green house gases ( carbon
dioxide, methane) into our atmosphere
 Will increase droughts and flooding and the spread of infectious
diseases
o Rivers and Dams
 The damming and flooding of river systems has been met with
long term resistance
o Fish and Forest
 Fighting for the growth of forests
Social Rights
 Recognition of basic social rights such as housing, education, social assistance,
and income security
o An on going priority for civil society groups in most countries
 Basic social rights have become the target of a rent less series of assaults though
government cutbacks, privatization and deregulation
 SAPs have had a devastating effect on social basic rights and public services
o Public education
 The universal access to education is depleting due to corporations
wanting to charge for schooling
o Health care
 The price of prescriptions has sky rocketed
 Corporations use patents to protect their drugs
o Social security
 Access to social security when people are unemployed is being cut
by governments due to privatization and deregulation
 Governments are allowing corporations to take over the operation
of welfare, welfare, workfare and prison programs
Cultural Rights
 It is generally recognized that all people have the right to preserve their own
language, values, customs, traditions and heritage
o Theme parks
 The American Dream has become the new global monoculture
o Media Empires
 The main engine of global monoculture is the media entertainment
empires
 TV, internet, company mergers
o Indigenous knowledge
 Corporations are using patent laws to claim ownership over seed
varieties and medical plants, especially in the richly biodiversity
regions of the developing world
Human Rights  Women‘s rights, right against exploitive work bodily harm sexual abuse, racial
discrimination, and any form of slavery
o The Flesh trade
 Sex tourism
 Taking advantage of women who do not have jobs
o Military Repression
 The military working with Corporations to repress the people
 Example: Shell in Nigeria
o Labor Standards
Free Trade
th
 A political-economic concept popularized in the 19 C; promised on the belief
that the removal of barriers to trade and the limitation of state intervention in
economic and social interactions within and between nation-states would provide
the greatest social gains for all countries involved. Significantly revived since the
1970s, free trade is supported on the grounds of state regulation of the market is
inherently inefficient and wasteful while an unregulated market operates as an
efficient hidden hand that responds accurately to undistorted markets signals of
supply and demand
 Advocated by the WTO, and other development institutions
 Accountability
o Very little
o Many trade deals made in secret
o Adjudication of disputes under WTO/NAFTA tend to be done in secrecy
o Little space for citizen input
o Relies on notion of the ‗invisible hand‘ behind markets
o What they ‗don‘t like‘ is regulation
 Believe that free trade sparks competition, which leads to technological
innovation and specialization
 Idea of comparative advantage
Fair Trade
 A political-economic concept that has gained popularity since WW2, promised on
a belief in the need for international market regulation in the interests of poorer
southern nations to combat the historical legacy of colonialism, dependency, and
underdevelopment. Proponents of fair trade tend to focus on two issues: the
development and expansion of interventionist mechanisms to ensure fait prices
and living standards for farmers and workers in the Global South and the
elimination for unfair protectionist policies in the North
 Promoted by NGOs and concer